Friederichs v McLeay & Sons Carpets Pty Ltd No. Scgrg-99-1044 Judgment No. S472

[1999] SASC 472

FRIEDERICHS & ANOR v McLEAY & SONS CARPETS PTY LTD
[1999] SASC

Magistrates Appeals
1 OLSSON J     This is an appeal against a judgment entered by a stipendiary magistrate on 16 August 1999.  He ordered the male appellant to pay the respondent a sum of $6059, plus costs, in respect of what was found to be the balance of his contractual liability for certain curtains and carpet ordered from the respondent.
2 The notice of appeal, which is expressed to be lodged by both of the appellants, originally pleaded a variety of grounds.  Distilled to the essence, these averred that there was no relevant contract giving rise to any liability to pay the moneys in question. Alternatively, it was said that any moneys for which the appellants were contractually liable were not due and payable at the time of issue of the Magistrates Court proceedings, and the decision of the learned special magistrate was against the evidence and the weight of evidence.
3 As the relevant judgment was entered only against the male appellant, his wife is not properly a party to the appeal.  Hereafter, I will simply refer to "the appellant", by which expression I mean Mr Friederichs.
4 When the appeal came on for hearing Mr Randall, of counsel for the appellant, abandoned all but one aspect of the appeal.  He conceded liability for certain sums, but contended that the respondent's claim for moneys due under contract was not sustainable with regard to an amount of $3668, portion of the judgment awarded against the appellant.
5 I first turn to the facts.
6 In the instant case the learned magistrate heard evidence from a variety of witnesses, all of whom had some involvement in the relevant transactions.  He was also able to have recourse to some documentation which had been raised by the respondent.
7 It is clear that the learned magistrate accepted the evidence of the witness Haig, the manager of the respondent's soft furnishing department.  Her evidence was to the effect that the male appellant and his wife came to the respondent's premises and requested a quotation for the supply and installation of selected curtains for the main bedroom of their home.  Haig gave a quotation of $1764 which, at that initial stage, was based upon measurements supplied by the appellant.  It was a quotation which was subject to check measurement by an appropriate employee of the respondent.
8 The witness Sterns, who was engaged by the respondent to measure and install curtains, attended the appellant's premises on 23 September 1998.  Having carried out a check measurement for the main bedroom curtains, he was requested by the appellant also to measure for a quotation in relation to the possible installation of curtains and blinds elsewhere in the premises.
9 As a result of the check measurement of the bedroom the respondent gave a revised price for the curtains.  The figure reduced from $1764 to $1161, because less material than was originally anticipated was needed.  As I understand the effect of the evidence it is that the appellant was due to pay a deposit of $400 in relation to the making and supply of the curtains.  It appears that he did not do so until 24 October 1998, which was shortly after the curtains had actually been supplied and installed by Sterns.  I will, in due course, return to that topic.
10 No complaint was ever made with regard to the installation of the curtains for the main bedroom. It follows that, on any view, the appellant was due to pay a balance of $761 to the respondent in respect of them.
11 The quotation given for the additional curtains and blinds, which related to the sitting-room, dining-room, bathroom, toilet, and a door totalled $3668.  This was based on the calculation set out in exhibit P10.
12 The respondent's records indicate that the appellant telephoned on 1 October 1998, requesting loan curtains for the bedroom, while new ones were being made.  The relevant note records that the appellant said that his wife was coming in on 6 October 1998 to choose fabrics for the additional curtains and blinds which had been quoted for.
13 The respondent's file further contained a memorandum written by a member of its staff on 29 October 1998.  This recorded that the appellant had come in and given an instruction to go ahead with the rest of the job which had been the subject of the second quote.  The relevant memorandum appears as Exhibit P15.  The witness Davie verified that it was to her that the appellant had spoken on this occasion and that she had written out the memorandum at the time.
14 The evidence reveals that, prior to this time, there had been some unhappiness between the appellant and the respondent due to the fact that, as at the time when the bedroom curtains were due for installation, the promised deposit had not been paid.  There had been an altercation on the telephone between Haig and the appellant about this, as a result of which the appellant had become angry and purported to cancel the order, notwithstanding that the curtains were then ready for installation.  This had been followed by a telephone call from the appellant's wife, who apologised for her husband's conduct and promised to see the deposit paid.  As already appears, this did not happen until shortly after the actual installation.
15 Evidence was given by Haig to the effect that, at some time after the date of installation of the bedroom curtains, the appellant came to the showroom with regard to a carpet order and then spoke to Haig.  He apologised for his earlier conduct and said that he was going ahead with the additional curtains and blinds.  This must have been on or about 3 November 1998, because it was on that date that the respondent raised a formal order for the work, a copy of which is Exhibit P11.  It is to be noted that a separate order bearing the same date was raised by another employee of the respondent in relation to the supply and installation of carpet in the appellant's lounge room for a contract price of $1634.
16 It is clear that there was an initial problem in the filling of the order for the additional curtains and blinds, due to the fact that some fabric, which had originally been ordered in by the respondent, was flawed.  This was advised to the appellant's wife by telephone, because the respondent had originally been asked if the order could be processed by Christmas.
17 The additional order was eventually ready for installation by 3 March 1999.  The overall delay had been due, in part, to the Christmas industry shut down and, in part, the need to replace the flawed fabric.  When Sterns contacted the appellant and his wife to arrange for installation the appellant said that he had never given authorisation to proceed with the job.  He refused to permit the installation and rejected any liability for the items in question.
18 A careful perusal of the transcript of the evidence of the appellant reveals that the appellant was a most unsatisfactory witness.  His testimony was inherently contradictory and, on the face of it, most unconvincing.  On page 17 of the transcript he is recorded as conceding that he asked whether it was possible to get the curtains and blinds for the other rooms installed prior to Christmas.  He agreed that the witness Haig telephoned the manufacturer and then told him that there could be a slight chance to get the curtains done by then, but that she could not guarantee it.  The appellant himself volunteered that, in response to that statement, he said "Allright, can have them".  Later in his evidence the appellant said that, when Sterns arrived to install the additional curtains and blinds, the appellant told him "First I must have the written quotation before you can put them up".  (Transcript page 18).  When cross examined the appellant's evidence changed direction once again.  He then asserted that he had actually ordered the curtains " subject to the availability of material".  A little later he changed his evidence to say that the order was not subject to availability but was "subject to a quotation".  As the learned magistrate pointed out, there was also some suggestion that the order had been placed conditional upon that the goods being available by Christmas.
19 In the course of his ex tempore reasons the learned magistrate recited the brief history of the matter and also reflected upon the fact that invoices for the order and for the carpet ordered on 3 November 1998 were raised in a timely fashion and sent by post to the appellant.  These reflected the normal terms of trade of the respondent and expressly stipulated that property in goods supplied was not to pass until payment was made for them.
20 This occurred well before the fabric was finally available and the curtains manufactured.  The appellant said that he did not receive the invoices.  His evidence as to non receipt of the documentation to which I have referred and subsequent correspondence was most unconvincing on the face of it.
21 It is plain from the remarks of the learned magistrate that he substantially accepted the evidence of the respondent's witnesses, in preference to that of the appellant and his wife, where any conflict arose.  It is small wonder that he did so.
22 He entertained no doubt that the evidence indicated, on the balance of probabilities, that the appellant did order the additional curtains and blinds and had, in effect, repudiated that order.  He also found that a balance of $1634 in respect of carpet supplied for the lounge had not been paid.
23 Accordingly, the learned magistrate entered judgment against the appellant for the total of $6059 previously referred to, plus costs.  He did so upon the expressed footing that, upon satisfaction of the judgment, the appellant was entitled to have the curtains and blinds installed in his home by the respondent.
24 I do not take the appellant to now dispute the relevant facts, substantially as I have recited them above.  He concedes liability for the sums of $761 (balance due in respect of the bedroom curtains) and $1634 (in respect of the lounge carpet).
25 As to the sum of $3668, which had been claimed for the additional curtains and blinds, the appellant's argument really comes to these propositions:-
(1)  the disputed contract was one for sale of goods;
(2) under s 48(1) of the Sale of Goods Act 1895 an action for the contract price is only maintainable when the property in the relevant goods has passed and the purchaser has wrongfully failed to pay the agreed price;
(3)  this was a contract for unascertained goods.  Accordingly property only passes where goods of the relevant description and in a deliverable state are unconditionally appropriated to the contract by the seller with the express or implied consent of the purchaser;  and
(4) in the instant case, that stage would not be reached until the curtains and blinds had actually been installed (cf Philip Head & Sons Ltd v Showfronts Ltd [1970] 1 Lloyd's Rep 140). This did not ever occur.
26 As I understand the situation, counsel for the appellant does not run away from the proposition that there was an unlawful repudiation by the appellant of the contract to make and install the additional curtains and blinds. Rather, he contends that the remedy of the respondent lay in damages for non acceptance, the measure being properly ascertained in accordance with s 49(3) of the Sale of Goods Act. Because there was no evidence led as to the existence or otherwise of an available market for the goods and what price the goods could have commanded on resale, there was no basis for the judgment entered in respect of the sum of $3668.
27 The first issue to be addressed is as to whether the appellant is correct in seeking to characterise the relevant contract as one for the sale of goods, which attracts the operation of the Sale of Goods Act.
28 The arrangement was, in practical terms, of a hybrid nature.  The respondent was to supply the materials selected for the curtains and blinds, but the contract envisaged that the requisite items were to be made up to agreed measurements and then installed, ie there was a significant amount of work to be done to the materials.  The ultimate obligation of the respondent was to install, in the appellants' home, items manufactured to the agreed specification.
29 In some cases there may well be a difficult line to be drawn between contracts for work done (including materials supplied) on the one hand and a contract for the sale of goods on the other.  However, it seems to me that, in the instant case, the work done was, in reality, to fashion the primary materials into a customised form to fit the intended venue, ie it was, primarily, an agreement for the sale and supply of goods.  Whilst these were to be "installed", they scarcely became a fixture, so as to lose their character as movable chattels.  The work was incidental and peripheral to what was essentially the production and supply of chattels.
30 The authorities bearing on this topic do not appear to be entirely settled (cf Brooks Robinson Pty Ltd v Rothfield [1951] VLR 405 at 407-8 ("the substance of the contract test") with what fell from Fullagar J in Data Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 at 181-6. See also Pacific Film Laboratories v Commissioner of Taxation (1970) 44 ALJR 376 at 377 and Wansborough v Edwards (1941) 36 Tas LR 1 at 3-4). However, it seems to me that the preponderance of authority favours a conclusion that the contract in this case was for the sale of goods and not work done and materials supplied. The essential object of the work done was, as I have indicated, to produce what was clearly a chattel.
31 That being so the next issue is as to whether it can fairly be said that goods were unconditionally appropriated to the contract by the respondent, with at least the implied consent of the appellant.
32 As a general rule, and in absence of a contrary specific condition of the contract, the act which constitutes appropriation of future goods sold by description is the last act to be performed by the seller.
33 So it was, in Philip Head & Sons Ltd v Showfronts Ltd (supra) it was held that property in a carpet which sellers agreed to deliver and lay had not passed and the goods had not been appropriated at a point when the final acts of stitching and laying had not been done by the seller.  It is impossible to distinguish conceptually between that case and the facts now before me.
34 Mr Rochow, of counsel for the respondent, sought to derive comfort from Gamer's Motor Centre (Newcastle) Proprietary Ltd v Natwest Wholesale Australia Pty Ltd (1987) 163 CLR 236 ("Gamer"). It was there held that "delivery" for the purposes of s 28(1) of the Sale of Goods Act, 1923 (NSW) could be of a constructive nature. He argued that the tendering of delivery, by offer to install, was sufficient to constitute passage of title by way of constructive delivery.
35 He went on to argue that the appellant cannot set up a wrongful rejection of the offer to install so as to prevent a passage of title.  To permit that, he said, would be to create a safe haven for dishonest debtors.
36 In my opinion the decision in Gamer focused on a very different factual situation.  It does not stand as authority for the proposition which Mr Rochow sought to contend, in a situation where the full terms of the original contract had not been performed by a vendor (albeit due to a wrongful act of the purchaser) and property had not passed.
37 The true situation in the instant case is as described by McCardie J in Colley v Overseas Exporters [1921] 3 KB 302 at 310. That is a direct authority supporting the conclusion which I have expressed above.
38 The combined effect of s 48 and s 49 of the Sale of Goods Act is that, in situations where property in goods has passed, an action for the price of them can be maintained in case of neglect or refusal to pay. In the case of wrongful non acceptance the statutory remedy is an action for damages for non acceptance. In such a situation the measure of damages is the estimated loss directly and naturally resulting from the breach - that loss, prima facie, being the difference between the contract price and the market or current price, if there is an available market.
39 Common sense would suggest that it may be unlikely that there would be an available market for curtains and blinds of selected materials, custom made for a specific household location and environment, at least other than for a relatively nominal consideration.  However, it is true that no evidence was given on that score.
40 Whilst the learned  magistrate proceeded as he did in a laudable attempt to deal with a fairly obvious situation in a practical manner, he was, with respect, technically in error.
41 The question arises as to how I should deal with that situation.
42 SCR 97.18 invests me with very wide discretionary powers. Whilst I could allow the appeal as to this one aspect and remit the case to the Magistrates Court, the costs potentially involved strongly suggest that this is not an efficacious approach. The point is a short one and capable of summary disposal.
43 The respondent ought, clearly, to be permitted to amend its pleadings to seek damages rather than the price of goods sold;  and lead short evidence as to damage likely to be suffered.  The appellant, should he so desire, can lead answering evidence on this issue.
44 The proper course will be to allow the appeal, set aside so much of the judgment as relates to the component of $3668 and then deal with the above aspects in a summary fashion.

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